8-K
Colgate Palmolive Co (CL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) (May 1, 2020)
COLGATE-PALMOLIVE COMPANY
(Exact name of registrant as specified in its charter)
| Delaware | 1-644 | 13-1815595 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 300 Park Avenue,<br> New York, New York | 10022 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code (212) 310-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions \(see General Instruction A.2. below\):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which<br><br> <br>registered |
|---|---|---|
| Common Stock, $1.00 par value | CL | New York Stock Exchange |
| 0.000% Notes due 2021 | CL 21A | New York Stock Exchange |
| 0.500% Notes due 2026 | CL 26 | New York Stock Exchange |
| 1.375% Notes due 2034 | CL 34 | New York Stock Exchange |
| 0.875% Notes due 2039 | CL 39 | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02.
Results of Operations and Financial Condition.
On May 1, 2020, Colgate-Palmolive Company (the “Company”) issued a press release announcing its earnings for the quarter ended March 31, 2020. This press release is attached as Exhibit 99 and is incorporated herein by reference.
The information in Item 2.02 of this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
Item 9.01.
Financial Statements and Exhibits.
(d)
Exhibits. The following exhibit is filed with this document:
| Exhibit Number | Description |
|---|---|
| 99 | Press release, dated May 1, 2020, issued by Colgate-Palmolive Company |
| 104 | Cover Page Interactive Data File (embedded within the Inline eXtensible Business Reporting Language (Inline XBRL) document) |
2
EXHIBIT INDEX
| Exhibit Number | Description |
|---|---|
| 99 | Press release, dated May 1, 2020, issued by Colgate-Palmolive Company |
| 104 | Cover Page Interactive Data File (embedded within the Inline eXtensible Business Reporting Language (Inline XBRL) document) |
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| COLGATE-PALMOLIVE COMPANY | ||
|---|---|---|
| Date: May 1, 2020 | By: | /s/ Henning I. Jakobsen |
| Name: Henning I. Jakobsen | ||
| Title: Chief Financial Officer |
4
Exhibit 99
Colgate Announces 1st Quarter 2020 Results
NEW YORK--(BUSINESS WIRE)--May 1, 2020--Colgate-Palmolive Company (NYSE:CL)
- Net sales increased 5.5%, Organic sales* increased 7.5%
- GAAP EPS grew 28% to $0.83, Base Business EPS* grew 12% to $0.75
- GAAP Gross profit margin was 60.2%, Base Business Gross profit margin* was 60.3%
- Net cash provided by operations was $768 million
- The Company is withdrawing its 2020 financial guidance due to the uncertainty surrounding the business impacts from COVID-19 and related macroeconomic volatility
- Colgate’s leadership in toothpaste continued with its global market share at 40.5% year to date
- Colgate’s leadership in manual toothbrushes continued with its global market share at 32.1% year to date
| First Quarter Total Company Results (GAAP) | ||||
|---|---|---|---|---|
| ($ in millions except per share amounts) | 2020 | 2019 | Change | |
| Net Sales | $4,097 | $3,884 | +5.5 | % |
| EPS (diluted) | $0.83 | $0.65 | +28 | % |
| First Quarter Total Company Results (Base Business - Non-GAAP)* | ||||
| ($ in millions except per share amounts) | 2020 | 2019 | Change | |
| Organic Sales Growth | +7.5 | % | ||
| Base Business EPS (diluted) | $0.75 | $0.67 | +12 | % |
| *Indicates a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and to “Table 5 - Geographic Sales<br> Analysis Percentage Changes” and “Table 6 - Non-GAAP Reconciliations” included with this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures. The term Base Business as used in this release is the<br> same as what we have traditionally referred to as non-GAAP in prior press releases. |
Colgate-Palmolive Company (NYSE:CL) today reported results for first quarter 2020. Noel Wallace, Chairman, President and Chief Executive Officer, commented, “The worldwide COVID-19 pandemic has required all of us to rethink how we interact in the world, how we work and how we live. Our responsibility to our employees, our customers, our consumers, our communities and our shareholders has never been greater. We take these responsibilities very seriously and our teams around the world are rising strongly to the challenges before us.
“First and foremost, we are working to ensure all of our facilities are following the necessary protocols to maintain the health and safety of Colgate people. Colgate people everywhere are leveraging our available technologies to maximize our connectivity and productivity and are working hard to meet increased demand, particularly for health and hygiene products. The strong first quarter results reflect the dedication, creativity and courage of our teams on the ground and just how agile we have become.
“We are proud to be supporting the World Health Organization’s #SafeHands effort to help stop the spread of the COVID-19 virus with our commitment to produce and donate 25 million soap bars in the regions facing acute needs. Separately, we are donating $20 million worth of health and hygiene products to community-based organizations in the U.S. and abroad.
“Looking ahead, we expect a mid-single digit negative impact on net sales for the year from foreign exchange, based on current spot rates. Furthermore, we expect some of the additional volume from the first quarter to come out of future quarters, as consumers work through pantry inventory in certain categories. We also expect government actions and consumer behavior related to COVID-19 and economic uncertainty to reduce category growth in many markets. It is the uncertainty related to these factors that has led us to temporarily suspend our financial guidance for 2020. As we proceed through this pandemic we plan to reinstate our guidance when we have the visibility to forecast our results with more confidence.”
Mr. Wallace concluded, “Colgate has a long history of managing through difficult times. I am confident that our financial strength, prudent operating discipline and the resilience of Colgate people everywhere will help us to emerge from this crisis even stronger.”
Divisional Performance
The following are comments about divisional performance for first quarter 2020 versus the year ago period. See attached "Table 5 - Geographic Sales Analysis Percentage Changes" and "Table 4 - Segment Information" for additional information on divisional net sales and operating profit.
| First Quarter Sales Growth By Division<br><br> <br>(% change 1Q 2020 vs 1Q 2019) | ||||||
|---|---|---|---|---|---|---|
| Net <br><br> Sales | Organic <br><br> Sales* | As Reported <br><br> Volume | Organic <br><br> Volume | Pricing | FX | |
| North America | +9.0% | +8.0% | +9.5% | +8.0% | —% | -0.5% |
| Latin America | —% | +10.5% | +4.0% | +4.0% | +6.5% | -10.5% |
| Europe | +12.0% | +6.5% | +16.5% | +8.0% | -1.5% | -3.0% |
| Asia Pacific | -9.5% | -7.5% | -8.5% | -8.5% | +1.0% | -2.0% |
| Africa/Eurasia | +5.0% | +8.0% | +10.0% | +8.5% | -0.5% | -4.5% |
| Hill's | +20.0% | +21.0% | +17.0% | +17.0% | +4.0% | -1.0% |
| Total Company | +5.5% | +7.5% | +7.0% | +5.5% | +2.0% | -3.5% |
| *Indicates a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and to “Table 5 - Geographic Sales Analysis Percentage Changes” included with<br> this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures.<br><br> <br>The impact of the previously disclosed acquisitions of the Filorga skin health business, the new joint venture in Nigeria and the Hello oral care business on as reported volume was 1.5% for<br> Total Company and 8.5%, 1.5% and 1.5% for Europe, Africa/Eurasia and North America, respectively. |
| First Quarter Operating Profit By Division <br> ( in millions) | |||
|---|---|---|---|
| % Change vs <br><br> 1Q 2019 | % to Net <br><br> Sales | Change in basis <br><br> points vs 1Q 2019 <br><br> % to Net Sales | |
| North America | 4% | 27.8% | -140 |
| Latin America | 7% | 27.9% | +180 |
| Europe | 2% | 22.8% | -230 |
| Asia Pacific | -15% | 25.4% | -160 |
| Africa/Eurasia | 22% | 22.2% | +300 |
| Hill's | 24% | 28.2% | +90 |
| Total Company, As Reported | 8.3% | 23.2% | +60 |
| Total Company, Base Business* | 5.5% | 23.4% | — |
| *Indicates a non-GAAP financial measure. Please refer to “Non-GAAP Financial Measures” later in this release for definitions of non-GAAP financial measures and to “Table 6 - Non-GAAP<br> Reconciliations” included with this release for a reconciliation of these non-GAAP financial measures to the related GAAP measures. |
All values are in US Dollars.
North America (23% of Company Sales)
- Organic sales growth was led by the United States.
- In the United States, Colgate's share of the toothpaste market is 35.1% year to date and its share of the manual toothbrush market is 41.5% year to date.
- The decrease in Operating profit as a percentage of Net sales was primarily due to increased advertising investment, higher raw and packaging material costs, unfavorable mix and higher overhead expenses, partially offset by cost savings from the Company’s funding-the-growth initiatives.
Latin America (22% of Company Sales)
- Organic sales growth was led by Argentina, Brazil and Mexico.
- The increase in Operating profit as a percentage of Net sales was primarily due to higher pricing and cost savings from the Company’s funding-the-growth initiatives, partially offset by higher raw and packaging material costs, which included foreign exchange transaction costs.
Europe (16% of Company Sales)
- Organic sales growth was led by the United Kingdom and Germany.
- The decrease in Operating profit as a percentage of Net sales was primarily due to higher overhead expenses, incremental amortization expense related to the Filorga acquisition, higher raw and packaging material costs, which included foreign exchange transaction costs, increased advertising investment and lower pricing, partially offset by favorable mix and cost savings from the Company’s funding-the-growth initiatives.
Asia Pacific (15% of Company Sales)
- Organic sales declines in the Greater China region and India were partially offset by organic sales growth in Australia.
- The decrease in Operating profit as a percentage of Net sales was primarily due to higher raw and packaging material costs, which included foreign exchange transaction costs, higher overhead expenses and increased advertising investment, partially offset by cost savings from the Company’s funding-the-growth initiatives.
Africa/Eurasia (6% of Company Sales)
- Organic sales growth was led by Turkey and Russia.
- The increase in Operating profit as a percentage of Net sales was primarily due to cost savings from the Company’s funding-the-growth initiatives, lower overhead expenses and lower raw and packaging material costs, partially offset by increased advertising investment.
Hill's Pet Nutrition (18% of Company Sales)
- Organic sales growth was led by the United States and Europe.
- The increase in Operating profit as a percentage of Net sales was primarily due to lower overhead expenses, cost savings from the Company’s funding-the-growth initiatives and higher pricing, partially offset by increased advertising investment and higher raw and packaging material costs.
Webcast Information
At 8:30 a.m. ET today, Colgate will host a conference call regarding first quarter results. To access this call as a webcast, please go to Colgate’s website at http://www.colgatepalmolive.com.
About Colgate-Palmolive
Colgate-Palmolive is a leading global consumer products company with 34,000 people dedicated to improving the health and wellness of people and their pets. Focused on Oral Care, Personal Care, Home Care and Pet Nutrition and reaching more than 200 countries and territories, Colgate teams are developing, producing, distributing and selling health and hygiene products and pet nutrition offerings essential to society through brands such as Colgate, Palmolive, elmex, meridol, Tom’s of Maine, hello, Sorriso, Speed Stick, Softsoap, Irish Spring, Protex, Sanex, Filorga, eltaMD, PCA Skin, Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science Diet and Hill’s Prescription Diet. The Company also is recognized for its leadership and innovation in promoting environmental sustainability and community wellbeing, including its achievements in saving water, reducing waste, promoting recyclability and improving the oral health of children through its Bright Smiles, Bright Futures program, which has reached more than one billion children since 1991. For more information about Colgate’s global business and how the Company is building a future to smile about, visit http://www.colgatepalmolive.com. CL-E
Market Share Information
Management uses market share information as a key indicator to monitor business health and performance. References to market share in this press release are based on a combination of consumption and market share data provided by third-party vendors, primarily Nielsen, and internal estimates. All market share references represent the percentage of the dollar value of sales of our products, relative to all product sales in the category in the countries in which the Company competes and purchases data (excluding Venezuela from all periods).
Market share data is subject to limitations on the availability of up-to-date information. In particular, market share data is currently not generally available for certain retail channels, such as eCommerce or certain discounters. The Company measures year-to-date market shares from January 1 of the relevant year through the most recent period for which market share data is available, which typically reflects a lag time of one or two months. The Company believes that the third-party vendors it uses to provide data are reliable, but it has not verified the accuracy or completeness of the data or any assumptions underlying the data. In addition, market share information reported by the Company may be different from market share information reported by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors.
Cautionary Statement on Forward-Looking Statements
This press release and the related webcast may contain forward-looking statements (as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (SEC) in its rules, regulations and releases) that set forth anticipated results based on management’s current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin growth, earnings per share levels, financial goals, the impact of foreign exchange, the impact of COVID-19, cost-reduction plans, tax rates, new product introductions, commercial investment levels, acquisitions, divestitures, share repurchases, or legal or tax proceedings, among other matters. These statements are made on the basis of the Company’s views and assumptions as of this time and the Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, the Company does not, nor does any other person, assume responsibility for the accuracy and completeness of these statements. The Company cautions investors that any such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from those statements. For more information about factors that could impact the Company’s business and cause actual results to differ materially from forward-looking statements, investors should refer to the Company’s filings with the SEC (including, but not limited to, the information set forth under the captions “Risk Factors” and “Cautionary Statement on Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q). Copies of these filings may be obtained upon request from the Company’s Investor Relations Department or on the Company’s website at http://www.colgatepalmolive.com.
Non-GAAP Financial Measures
The following provides definitions and other information regarding the non-GAAP financial measures used in this press release and/or the related webcast, which may not be the same as or comparable to similar measures presented by other companies:
- Base Business: Base Business refers to non-GAAP measures of operating results that exclude certain items. Base Business operating results exclude, as applicable, charges resulting from the Global Growth and Efficiency Program, acquisition-related costs and a benefit related to a recent reorganization of the ownership structure of certain foreign subsidiaries and a new operating structure being implemented within one of the Company's divisions.
- Organic sales growth: Net sales growth excluding the impact of foreign exchange, acquisitions and divestments.
- Free cash flow before dividends: Net cash provided by operations less Capital expenditures.
This press release discusses Net sales growth (GAAP) and Organic sales growth (non-GAAP). Management believes the organic sales growth measure provides investors and analysts with useful supplemental information regarding the Company’s underlying sales trends by presenting sales growth excluding the external factor of foreign exchange as well as the impact from acquisitions and divestments. See “Table 5 - Geographic Sales Analysis Percentage Changes” for the three months ended March 31, 2020 vs. 2019 included with this release for a comparison of Organic sales growth to Net sales growth in accordance with GAAP.
Worldwide Gross profit, Gross profit margin, Selling, general and administrative expenses, Selling, general and administrative expenses as a percentage of Net sales, Other (income) expense, net, Operating profit, Operating profit margin, Non-service related postretirement costs, Effective income tax rate, Net income attributable to Colgate-Palmolive Company and Diluted earnings per common share are disclosed on both an as reported (GAAP) and Base Business (non-GAAP) basis. These non-GAAP financial measures exclude items that, either by their nature or amount, management would not expect to occur as part of the Company’s normal business on a regular basis, such as restructuring charges, charges for certain litigation and tax matters, gains and losses from certain divestitures and certain unusual, non-recurring items. Investors and analysts use these financial measures in assessing the Company’s business performance, and management believes that presenting these financial measures on a non-GAAP basis provides them with useful supplemental information to enhance their understanding of the Company’s underlying business performance and trends. These non-GAAP financial measures also enhance the ability to compare period-to-period financial results. See “Table 6 - Non-GAAP Reconciliations” for the three months ended March 31, 2020 and 2019 included with this release for a reconciliation of these financial measures to the related GAAP measures.
The Company uses these financial measures internally in its budgeting process, to evaluate segment and overall operating performance and as factors in determining compensation. While the Company believes that these financial measures are useful in evaluating the Company’s underlying business performance and trends, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.
As management uses free cash flow before dividends to evaluate the Company’s ability to satisfy current and future obligations, repurchase stock, pay dividends and fund future business opportunities, the Company believes that it provides useful information to investors. Free cash flow before dividends is not a measure of cash available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure. See “Table 3 - Condensed Consolidated Statements of Cash Flows” for the three months ended March 31, 2020 and 2019 for a comparison of free cash flow before dividends to Net cash provided by operations as reported in accordance with GAAP.
(See attached tables for first quarter results.)
| Table 1 | ||||||
|---|---|---|---|---|---|---|
| Colgate-Palmolive Company | ||||||
| Condensed Consolidated Statements of Income | ||||||
| For the Three Months Ended March 31, 2020 and 2019 | ||||||
| (Dollars in Millions Except Per Share Amounts) (Unaudited) | ||||||
| 2020 | 2019 | |||||
| Net sales | $ | 4,097 | $ | 3,884 | ||
| Cost of sales | 1,632 | 1,597 | ||||
| Gross profit | 2,465 | 2,287 | ||||
| Gross profit margin | 60.2 | % | 58.9 | % | ||
| Selling, general and administrative expenses | 1,473 | 1,365 | ||||
| Other (income) expense, net | 40 | 43 | ||||
| Operating profit | 952 | 879 | ||||
| Operating profit margin | 23.2 | % | 22.6 | % | ||
| Non-service related postretirement costs | 21 | 25 | ||||
| Interest (income) expense, net | 36 | 40 | ||||
| Income before income taxes | 895 | 814 | ||||
| Provision for income taxes | 147 | 214 | ||||
| Effective tax rate | 16.4 | % | 26.3 | % | ||
| Net income including noncontrolling interests | 748 | 600 | ||||
| Less: Net income attributable to noncontrolling interests | 33 | 40 | ||||
| Net income attributable to Colgate-Palmolive Company | $ | 715 | $ | 560 | ||
| Earnings per common share | ||||||
| Basic | $ | 0.83 | $ | 0.65 | ||
| Diluted | $ | 0.83 | $ | 0.65 | ||
| Supplemental Income Statement Information | ||||||
| Average common shares outstanding | ||||||
| Basic | 856.9 | 862.0 | ||||
| Diluted | 858.4 | 863.2 | ||||
| Advertising | $ | 484 | $ | 429 |
| Table 2 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Colgate-Palmolive Company | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| As of March 31, 2020, December 31, 2019 and March 31, 2019 | |||||||||
| (Dollars in Millions) (Unaudited) | |||||||||
| March 31, | December 31, | March 31, | |||||||
| 2020 | 2019 | 2019 | |||||||
| Cash and cash equivalents | $ | 854 | $ | 883 | $ | 843 | |||
| Receivables, net | 1,551 | 1,440 | 1,547 | ||||||
| Inventories | 1,301 | 1,400 | 1,278 | ||||||
| Other current assets | 542 | 456 | 465 | ||||||
| Property, plant and equipment, net | 3,487 | 3,750 | 3,821 | ||||||
| Goodwill | 3,559 | 3,508 | 2,517 | ||||||
| Other intangible assets, net | 2,822 | 2,667 | 1,612 | ||||||
| Other assets | 954 | 930 | 800 | ||||||
| Total assets | $ | 15,070 | $ | 15,034 | $ | 12,883 | |||
| Total debt | $ | 7,846 | $ | 7,847 | $ | 6,661 | |||
| Other current liabilities | 3,933 | 3,524 | 3,859 | ||||||
| Other non-current liabilities | 2,950 | 3,105 | 2,573 | ||||||
| Total liabilities | 14,729 | 14,476 | 13,093 | ||||||
| Total Colgate-Palmolive Company shareholders’ equity | (113 | ) | 117 | (552 | ) | ||||
| Noncontrolling interests | 454 | 441 | 342 | ||||||
| Total liabilities and equity | $ | 15,070 | $ | 15,034 | $ | 12,883 | |||
| Supplemental Balance Sheet Information | |||||||||
| Debt less cash, cash equivalents and marketable securities^(1)^ | $ | 6,949 | $ | 6,941 | $ | 5,781 | |||
| Working capital % of sales | (3.6 | )% | (1.6 | )% | (3.9 | )% |
Note:
(1) Marketable securities of $43, $23 and $37 as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively, are included in Other current assets.
| Table 3 | ||||||
|---|---|---|---|---|---|---|
| Colgate-Palmolive Company | ||||||
| Condensed Consolidated Statements of Cash Flows | ||||||
| For the Three Months Ended March 31, 2020 and 2019 | ||||||
| (Dollars in Millions) (Unaudited) | ||||||
| 2020 | 2019 | |||||
| Operating Activities | ||||||
| Net income including noncontrolling interests | $ | 748 | $ | 600 | ||
| Adjustments to reconcile Net income including noncontrolling interests to Net cash provided by operations: | ||||||
| Depreciation and amortization | 133 | 128 | ||||
| Restructuring and termination benefits, net of cash | (30 | ) | 5 | |||
| Stock-based compensation expense | 16 | 17 | ||||
| Deferred income taxes | (99 | ) | 53 | |||
| Voluntary benefit plan contributions | — | (102 | ) | |||
| Cash effects of changes in: | ||||||
| Receivables | (211 | ) | (145 | ) | ||
| Inventories | 29 | (32 | ) | |||
| Accounts payable and other accruals | 220 | 44 | ||||
| Other non-current assets and liabilities | (38 | ) | 37 | |||
| Net cash provided by operations | 768 | 605 | ||||
| Investing Activities | ||||||
| Capital expenditures | (82 | ) | (71 | ) | ||
| Purchases of marketable securities and investments | (42 | ) | (27 | ) | ||
| Proceeds from sale of marketable securities and investments | 16 | — | ||||
| Payment for acquisitions, net of cash acquired | (351 | ) | — | |||
| Net cash used in investing activities | (459 | ) | (98 | ) | ||
| Financing Activities | ||||||
| Principal payments on debt | (1,200 | ) | (1,774 | ) | ||
| Proceeds from issuance of debt | 1,188 | 2,076 | ||||
| Dividends paid | (373 | ) | (366 | ) | ||
| Purchases of treasury shares | (220 | ) | (399 | ) | ||
| Proceeds from exercise of stock options | 297 | 71 | ||||
| Net cash provided by (used in) financing activities | (308 | ) | (392 | ) | ||
| Effect of exchange rate changes on Cash and cash equivalents | (30 | ) | 2 | |||
| Net increase (decrease) in Cash and cash equivalents | (29 | ) | 117 | |||
| Cash and cash equivalents at beginning of the period | 883 | 726 | ||||
| Cash and cash equivalents at end of the period | $ | 854 | $ | 843 | ||
| Supplemental Cash Flow Information | ||||||
| Free cash flow before dividends (Net cash provided by operations less Capital expenditures) | ||||||
| Net cash provided by operations | $ | 768 | $ | 605 | ||
| Less: Capital expenditures | (82 | ) | (71 | ) | ||
| Free cash flow before dividends | $ | 686 | $ | 534 | ||
| Income taxes paid | $ | 128 | $ | 149 |
| Table 4 | ||||||
|---|---|---|---|---|---|---|
| Colgate-Palmolive Company | ||||||
| Segment Information | ||||||
| For the Three Months Ended March 31, 2020 and 2019 | ||||||
| (Dollars in Millions) (Unaudited) | ||||||
| Three Months Ended March 31, | ||||||
| 2020 | 2019 | |||||
| Net Sales | ||||||
| Oral, Personal and Home Care | ||||||
| North America | $ | 929 | $ | 853 | ||
| Latin America | 889 | 889 | ||||
| Europe | 675 | 602 | ||||
| Asia Pacific | 633 | 700 | ||||
| Africa/Eurasia | 252 | 240 | ||||
| Total Oral, Personal and Home Care | 3,378 | 3,284 | ||||
| Pet Nutrition | 719 | 600 | ||||
| Total Net Sales | $ | 4,097 | $ | 3,884 | ||
| Three Months Ended March 31, | ||||||
| 2020 | 2019 | |||||
| Operating Profit | ||||||
| Oral, Personal and Home Care | ||||||
| North America | $ | 258 | $ | 249 | ||
| Latin America | 248 | 232 | ||||
| Europe | 154 | 151 | ||||
| Asia Pacific | 161 | 189 | ||||
| Africa/Eurasia | 56 | 46 | ||||
| Total Oral, Personal and Home Care | 877 | 867 | ||||
| Pet Nutrition | 203 | 164 | ||||
| Corporate^(1)^ | (128 | ) | (152 | ) | ||
| Total Operating Profit | $ | 952 | $ | 879 |
Note:
(1) Corporate operations include costs related to stock options and restricted stock units, research and development costs, Corporate overhead costs, and gains and losses on sales of non-core product lines and assets. Corporate Operating profit (loss) for the three months ended March 31, 2020 included a charge for acquisition-related costs of $6. Corporate Operating profit (loss) for the three months ended March 31, 2019, included charges of $28 resulting from the Global Growth and Efficiency Program, which ended on December 31, 2019.
| Table 5 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Colgate-Palmolive Company | ||||||||||||||
| Geographic Sales Analysis Percentage Changes | ||||||||||||||
| For the Three Months Ended March 31, 2020 vs. 2019 | ||||||||||||||
| (Unaudited) | ||||||||||||||
| COMPONENTS OF SALES CHANGE | ||||||||||||||
| Pricing | ||||||||||||||
| Coupons | ||||||||||||||
| Sales | Consumer & | |||||||||||||
| Change | Organic | As Reported | Organic | Ex-Divested | Trade | Foreign | ||||||||
| Region | As Reported | Sales Change | Volume | Volume | Volume | Incentives | Exchange | |||||||
| Total Company^(1)^ | 5.5 | % | 7.5 | % | 7.0 | % | 5.5 | % | 7.0 | % | 2.0 | % | (3.5 | )% |
| Europe^(1)^ | 12.0 | % | 6.5 | % | 16.5 | % | 8.0 | % | 16.5 | % | (1.5 | )% | (3.0 | )% |
| Latin America | — | % | 10.5 | % | 4.0 | % | 4.0 | % | 4.0 | % | 6.5 | % | (10.5 | )% |
| Asia Pacific | (9.5 | )% | (7.5 | )% | (8.5 | )% | (8.5 | )% | (8.5 | )% | 1.0 | % | (2.0 | )% |
| Africa/Eurasia^(1)^ | 5.0 | % | 8.0 | % | 10.0 | % | 8.5 | % | 10.0 | % | (0.5 | )% | (4.5 | )% |
| Total International | 0.5 | % | 4.0 | % | 4.0 | % | 2.0 | % | 4.0 | % | 2.0 | % | (5.5 | )% |
| North America^(1)^ | 9.0 | % | 8.0 | % | 9.5 | % | 8.0 | % | 9.5 | % | — | % | (0.5 | )% |
| Total CP Products^(1)^ | 3.0 | % | 5.0 | % | 5.5 | % | 3.5 | % | 5.5 | % | 1.5 | % | (4.0 | )% |
| Hill’s | 20.0 | % | 21.0 | % | 17.0 | % | 17.0 | % | 17.0 | % | 4.0 | % | (1.0 | )% |
| Emerging Markets^(2)^ | (3.0 | )% | 3.0 | % | — | % | (0.5 | )% | — | % | 3.5 | % | (6.5 | )% |
| Developed Markets^(2)^ | 13.5 | % | 11.5 | % | 14.0 | % | 11.0 | % | 14.0 | % | 0.5 | % | (1.0 | )% |
Notes:
(1) The impact of the previously disclosed acquisitions of the Filorga skin health business, the new joint venture in Nigeria and the Hello oral care business on as reported volume was 1.5% for Total Company and 2.0%, 8.5%, 1.5% and 1.5% for Total CP Products, Europe, Africa/Eurasia and North America, respectively.
(2) Emerging Markets include Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe. The impact of the previously disclosed acquisitions of the Filorga skin health business, the new joint venture in Nigeria and the Hello oral care business on as reported volume was 0.5% for Emerging Markets and 3.0% for Developed Markets.
| Table 6 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Colgate-Palmolive Company | ||||||||
| Non-GAAP Reconciliations | ||||||||
| For the Three Months Ended March 31, 2020 and 2019 | ||||||||
| (Dollars in Millions Except Per Share Amounts) (Unaudited) | ||||||||
| Gross Profit | 2020 | 2019 | ||||||
| Gross profit, GAAP | $ | 2,465 | $ | 2,287 | ||||
| Acquisition-related costs | 4 | — | ||||||
| Global Growth and Efficiency Program | — | 11 | ||||||
| Gross profit, non-GAAP | $ | 2,469 | $ | 2,298 | ||||
| Basis Point | ||||||||
| Gross Profit Margin | 2020 | 2019 | Change | |||||
| Gross profit margin, GAAP | 60.2 | % | 58.9 | % | 130 | |||
| Acquisition-related costs | 0.1 | % | — | % | ||||
| Global Growth and Efficiency Program | — | % | 0.3 | % | ||||
| Gross profit margin, non-GAAP | 60.3 | % | 59.2 | % | 110 | |||
| Selling, General and Administrative Expenses | 2020 | 2019 | ||||||
| Selling, general and administrative expenses, GAAP | $ | 1,473 | $ | 1,365 | ||||
| Global Growth and Efficiency Program | — | (4 | ) | |||||
| Selling, general and administrative expenses, non-GAAP | $ | 1,473 | $ | 1,361 | ||||
| Basis Point | ||||||||
| Selling, General and Administrative Expenses as a Percentage of Net Sales | 2020 | 2019 | Change | |||||
| Selling, general and administrative expenses as a percentage of Net sales, GAAP | 36.0 | % | 35.1 | % | 90 | |||
| Global Growth and Efficiency Program | — | % | (0.1 | )% | ||||
| Selling, general and administrative expenses as a percentage of Net sales, non-GAAP | 36.0 | % | 35.0 | % | 100 | |||
| Other (Income) Expense, Net | 2020 | 2019 | ||||||
| Other (income) expense, net, GAAP | $ | 40 | $ | 43 | ||||
| Acquisition-related costs | (2 | ) | — | |||||
| Global Growth and Efficiency Program | — | (13 | ) | |||||
| Other (income) expense, net, non-GAAP | $ | 38 | $ | 30 | ||||
| Operating Profit | 2020 | 2019 | % Change | |||||
| Operating profit, GAAP | $ | 952 | $ | 879 | 8 | % | ||
| Global Growth and Efficiency Program | — | 28 | ||||||
| Acquisition-related costs | 6 | — | ||||||
| Operating profit, non-GAAP | $ | 958 | $ | 907 | 6 | % | ||
| Basis Point | ||||||||
| Operating Profit Margin | 2020 | 2019 | Change | |||||
| Operating profit margin, GAAP | 23.2 | % | 22.6 | % | 60 | |||
| Global Growth and Efficiency Program | — | % | 0.8 | % | ||||
| Acquisition-related costs | 0.2 | % | — | % | ||||
| Operating profit margin, non-GAAP | 23.4 | % | 23.4 | % | — | |||
| Non-Service Related Postretirement Costs | 2020 | 2019 | ||||||
| Non-service related postretirement costs, GAAP | $ | 21 | $ | 25 | ||||
| Global Growth and Efficiency Program | — | (1 | ) | |||||
| Non-service related postretirement costs, non-GAAP | $ | 21 | $ | 24 |
| Table 6 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Continued | |||||||||||||||
| Colgate-Palmolive Company | |||||||||||||||
| Non-GAAP Reconciliations | |||||||||||||||
| For the Three Months Ended March 31, 2020 and 2019 | |||||||||||||||
| (Dollars in Millions Except Per Share Amounts) (Unaudited) | |||||||||||||||
| 2020 | |||||||||||||||
| Income Before Income Taxes | Provision For Income Taxes^(1)^ | Net Income Including Noncontrolling Interests | Net Income Attributable To Colgate-Palmolive Company | Effective Income Tax Rate^(2)^ | Diluted Earnings Per Share | ||||||||||
| As Reported GAAP | $ | 895 | $ | 147 | $ | 748 | $ | 715 | 16.4 | % | $ | 0.83 | |||
| Subsidiary and operating structure initiatives | — | 71 | (71 | ) | (71 | ) | 7.9 | % | (0.08 | ) | |||||
| Acquisition-related costs | 6 | 2 | 4 | 4 | 0.1 | % | — | ||||||||
| Non-GAAP | $ | 901 | $ | 220 | $ | 681 | $ | 648 | 24.4 | % | $ | 0.75 | |||
| 2019 | |||||||||||||||
| Income Before Income Taxes | Provision For Income Taxes^(1)^ | Net Income Including Noncontrolling Interests | Net Income Attributable To Colgate-Palmolive Company | Effective Income Tax Rate^(2)^ | Diluted Earnings<br><br> <br>Per Share | ||||||||||
| As Reported GAAP | $ | 814 | $ | 214 | $ | 600 | $ | 560 | 26.3 | % | $ | 0.65 | |||
| Global Growth and Efficiency Program | 29 | 7 | 22 | 22 | (0.1 | )% | 0.02 | ||||||||
| Non-GAAP | $ | 843 | $ | 221 | $ | 622 | $ | 582 | 26.2 | % | $ | 0.67 |
The impact of non-GAAP adjustments may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding.
Notes:
(1) The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.
(2) The impact of non-GAAP items on the Company’s effective tax rate represents the difference in the effective tax rate calculated with and without the non-GAAP adjustment on Income before income taxes and Provision for income taxes.
Contacts
John Faucher 212-310-3653
Hope Spiller 212-310-2291